Injuries Board says insurance hike not justified

Any increase in insurance premiums as a result of the global turmoil in international markets is unjustified, according to the Injuries Board.

Chief executive Patricia Byron rejected predictions by the Irish Brokers’ Association (IBA) that premiums would have to rise by up to 20 per cent because of declining investment conditions.

Ms Byron said claims costs were the main factor behind premium levels in Ireland and these had not changed in recent months. Since the board was set up to handle personal injuries claims in 2004, the cost of handling cases had fallen from 50 per cent per award to less than 8 per cent, thereby driving down the cost of insurance.

“At a time of economic downturn, with cost pressures facing business and consumers alike, it is important that the hard-earned cuts in insurance premiums of recent years are not reversed on the basis of tenuous or unsubstantiated links to global investment market turmoil,” Ms Byron added.

Earlier this month, the IBA claimed Irish consumers could see their insurance premiums rise as a result of the problems in global markets.

IBA president Canice O'Reilly said: “Many of the insurers' reserve funds were badly hit after Wall Street investment bank Lehman Brothers filed for bankruptcy protection and its peer, Merrill Lynch, was swallowed by Bank of America”.

“Insurance companies are now likely to become more cautious by shoring up their reserves and taking a more conservative approach to pricing. All of this is likely to lead to a 10 to 20 per cent increase in overall general insurance premiums over the short term, and 20 per cent-plus over the medium term,” he added.